India’s real GDP likely to maintain 9% growth rate in FY22, FY23: Report

The country’s real gross domestic product (GDP) is likely to maintain a 9 pc growth rate in fiscal 2022 and 2023, amid concerns over the Omicron variant of COVID-19, says a report.

The Indian economy grew at 8.4 per cent in the second quarter of the current fiscal, as against a growth of 20.1 per cent in the April-June quarter.

“We are maintaining our forecast of a 9 per cent GDP expansion in FY2022, with a clear K-shaped divergence amongst the formal and informal parts of the economy, and the large gaining at the cost of the small.

“Looking ahead, we expect the economy to maintain a similar 9 per cent growth in FY2023,” domestic rating agency Icra Ltd Chief Economist Aditi Nayar said in the report.

She expects the percentage of double-vaccinated adults to rise to 85-90 per cent by March 2022.

While the announcement of booster doses and vaccines for the 15-18 age group is welcome, it remains to be seen whether all the existing vaccines would offer adequate protection against the new Omicron variant to avert a third wave in India, Nayar said.

In any case, fresh restrictions being introduced by several states to curb the spread of COVID-19 may temporarily interrupt the economic recovery, especially in the contact-intensive sectors in Q4 FY2022, she added.

Nayar, however, expects the expansion in FY2023 to be more meaningful and tangible than the base effect-led rise in FY2022.

“Based on our assumptions of the GDP growth, if the COVID-19 pandemic had not emerged vs. the actual shrinkage that occurred in FY2021 and the expected recovery in the next two years, the net loss to the Indian economy from the pandemic during FY2021-23 is estimated at Rs 39.3 lakh crore, in real terms,” she said.

The available data for Q3 FY2022 does not offer convincing evidence that the Monetary Policy Committee’s (MPC’s) criteria of a durable and sustainable growth recovery has been met, to confirm a change in the Monetary Policy stance to neutral in February 2022, the rating agency said.

It believes that rising consumption will push capacity utilisation above the crucial threshold of 75 per cent by the end of 2022, which should then trigger a broad-based pick-up in private sector investment activity in 2023.

The agency also expects the visibility of tax revenue growth to spur faster government spending in 2022.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor